Top economists release consensus forecast at NAR Slower Growth, Price Gains to Continue
A group of prominent real estate industry economists today released a consensus economic and real estate forecast that projects continued but slowing growth in 2020. Meeting at the National Association of REALTORS ’ Washington, D.C., headquarters for the first-ever Real Estate Forecast Summit, the economists said they expect the U.S. economy to continue expanding next year and real estate prices to keep rising. To create the forecast, NAR surveyed the economists Dec. 2-5, and their responses were compiled and averaged. “Real estate is on firm ground with little chance of price declines,” says NAR’s Chief Economist Lawrence Yun. “However, in order for the market to be healthier, more supply is needed to assure home prices as well as rents do not consistently outgrow income gains.” Yun is one of 16 economists participating in today’s Summit, along with Leslie Appleton-Young of the California Association of REALTORS®; James Chessen of the American Bankers Association; James Gaines of the Real Estate Center at Texas A&M University; Danielle Hale of realtor.com; Danielle Nanayakkara Skillington of the National Association of Home Builders; Brad O’Connor of the Florida REALTORS®; and others.
Recession remains unlikely but not out of the question in 2020. The economists predicted a 29% probability of a recession with foretasted gross domestic product growth of 2.0% in 2020 and 1.9% in 2021. The group expects an annual unemployment rate of 3.7% next year with a small rise to 3.9% in 2021. Asked what action the Fed might take in 2020, 69% of the economists said they expect no change in the federal funds rate (the rate at which banks borrow money), while 31% expect the Fed to lower the rate next year. The group expects the 30-year fixed-rate mortgage to average 3.8% in 2020 and 4.0% in 2021.